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NexLiving Communities Inc. (CVE:NXLV) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. NexLiving Communities Inc. owns and manages multi-unit residential real estate properties in Canada. The company’s loss has recently broadened since it announced a CA$2.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$2.3m, moving it further away from breakeven. As path to profitability is the topic on NexLiving Communities' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 2 of the Canadian Real Estate analysts is that NexLiving Communities is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of CA$1.7m in 2022. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 152% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for NexLiving Communities given that this is a high-level summary, however, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. NexLiving Communities currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on NexLiving Communities, so if you are interested in understanding the company at a deeper level, take a look at NexLiving Communities' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:
Valuation: What is NexLiving Communities worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether NexLiving Communities is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on NexLiving Communities’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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